'I'd prefer a worldwide level playing field': Why Larian is opening a studio in Quebec

'You have to work with what’s available in the world, and that’s the situation we’re in'

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Belgian developer Larian Studios, the company behind last year’s hit RPG Divinity: Original Sin, has expanded from its European roots to open a new office in Quebec CIty.

The studio will initially house a core team of ten staff, with plans afoot to employ between 30 to 40 staff over the next three years. This would make the office as big as its current HQ in Ghent, and twice as big as its St Petersburg branch. The team will initially collaborate with existing teams on projects, including a new upcoming RPG, but eventually could work on its own titles.

It’s not difficult to guess the reasons why it’s opening up in Quebec City. The tax incentives it offers are some of the highest in the game industry at 37.5 per cent. Though last year it was reduced to as low as 24 per cent after the local government looked to fill a black hole in its finances, it is now being raised back up once again. It’s a key factor Larian Studios president Swen Vincke (Main picture, right) isn’t shy to admit attracted the studio.

“There’s a couple of reasons [we ’re opening a studio in Quebec City],” he says.

“There’s the tax credit, which is interesting and because we’re operating from Belgium where the cost of labour is quite high. Then there’s the experience pool which is present over there, which is very large. Again we’re operating from Belgium, and other than us there isn’t really anyone else in the country.

“Thirdly there’s a time zone difference that allows us to take advantage of the fact that the day becomes longer. And as we’re trying to make bigger RPGs with more stuff in it that becomes important for us also.”

An issue of scale

A core team of 35 staff developed Divinity: Original Sin, along with support from freelancers and its St Petersburg office. But to expand further, the high labour costs in Belgium, combined with a lack of tax incentives in the country, has made it difficult for Larian to scale up locally.

Vincke says it’s not impossible to develop games in Belgium, of course, but when expanding the extra costs incurred can become a problem when studios reach a certain size, particularly when maintaining burn rate.

“We’re the type of team that doesn’t like to do the hire and fire thing, everybody that works with us and is on the payroll stays on the payroll, so we do have to take it into account otherwise it doesn’t work out,” he explains. “It’s also the reason we typically work on two games at the same time.”

Vincke says that it needed to expand to a nation like Canada as the studio had reached a certain threshold, and were it to breach that by hiring more staff locally, the risk factors to the business would become very high.

“You have to be sure you can manage your burn rate comfortably and not enter the danger zone, so it’s something you start looking at as you increase scale,” he says.

When asked if he’d like better tax incentives in Belgium – as already approved for France and the UK – he adds: “I would prefer that we have a worldwide level playing field, that would be better. But you have to work with what’s available in the world, and that’s the situation we’re in.”

Fierce competiton

Opening up a new studio in Quebec City is not as easy as it sounds mind, though arguably it offers more incentives than other governments are willing to offer. Local competition for talent is fierce and the region is home to a number of super studios, including Ubisoft’s enormous Montreal office and its growing Quebec studio.

Vincke believes however this can work to Larian’s advantage, having chosen to set up shop in the province over other options it considered in Canada and the US.

“We’re not a super studio, we’re like a more humane-sized studio,” he says.

“So people who work on our games will actually have a direct impact on what the game is and have a very big influence over it. They’ll also be very hands-on within a very flat management structure, actually there’s almost no management structure, so that also helps. It’s more like development back in the day than the modern, hyper-competitive triple-A development where each decision is scrutinised by 200 people.”

Part of the need to expand its operations is the studio’s ambition to develop an RPG larger than what it has built before. And with that, says Vincke, comes the need for a bigger team, which incurs larger costs.

“RPGs are all about choice and consequence, and whenever I add massive consequences I certainly have to make a new part of the game,” he says.

“So the more choice and consequence I can put in my game the better it is going to be received. For all of that, we need scale.”

He adds: “Compromises we’ve done in the past have always been issues of: 'we can’t do this, we want to do this but we can’t do it because we have to compromise'. So the more we can do, and thanks to the successful of Divinity: Original Sin this has enabled us to do a lot of things, the better.”

For a long time, Quebec has inspired jealous rivals around the world for its generous tax breaks. But how are those incentives actually being put to use in Quebec City? Develop investigates the small but tightly-knit community